OKRs are hands down the best goal tracking system we’ve found for SaaS.
In episode 11, we discussed how to create them for your marketing team. Today, we’re going deeper, and talking about how to most effectively use, and manage them throughout your organization, from a leadership perspective.
We provide our framework, address common mistakes, and provide insight and best practices into how to succeed using OKRs.
Some of the questions we answer inside include:
Hello and welcome to episode 32 of B2B SaaS Marketing Snacks. My name is Richard. I work on the product team here at Kalungi and today we're talking about OKRs, OKRs being objectives and key results. So if you are unfamiliar with what OKRs are, we do do an intro to OKRs and how to use them with a marketing team in episode 11. So feel free to start there if you feel like you need an explanation and, or, introduction. With that being said, we decided to go deeper into the topic today, really because more people than ever are using OKRs as a tool to manage their progress, especially in SaaS companies. And the challenge is that there's a ton of information out there about how they should be used, how they should be administered, managed. And it's also a common topic among our clients. So we figured it was worth a revisit.
So today we're doing all things OKRs from a leadership perspective. We talk about a lot of things such as whether you should be cascading your OKRs throughout your organization, how to make sure you're using the right key results, whether they are action based versus tracking based, tracking things like revenue and the sort. We also talk about how they should evolve over time and give insight and some concrete examples into how to be successful using them and how to manage them throughout your teams, whether it's sales, marketing, or customer success. We also address some common mistakes that people make, and we just generally talk about how we like to think about them and our framework for them. So without further ado, I'll leave it to the experts. Here's Mike and Stijn.
Mike, this time of year is great to check in on how you use OKRs, objectives and key results, to drive a strong finish in Q4 and finish of the year. When I work with teams, doing OKRs well is such a fantastic tool to not only drive focus and urgency, but also clarify roles and responsibilities to make sure that people are working together. Although, OKRs also can lead to some silo behavior. If you work... If you use them well, it typically just means people are aware of what happens across the team. They can help each other, especially when you... in your incentive plan or your bonus system, you use some joint OKR performance across a team as part of how you reward people. I've seen it be a great tool for many of those purposes. And yeah let's chat about, now that Q4 has started, how we see that work.
Sure. One of the biggest... I think before we get into the specifics about OKRs, I'd love to hear your thoughts on how you see them being installed across an organization and a team. Because I know that one of the first questions that we get when we talk to our clients about putting OKRs into place is how to manage them when it comes to, I guess, the whole team. So is it something that you try to cascade down from the organization and then each team has their own OKRs and then each person has their own OKRs and they funnel up, or does each person have an individual set of OKRs and how do you tie those together and make sure that they're supporting the same thing?
That's an interesting question. I don't believe that cascading works really well, although in an ideal world, it is really cool, of course, when people find their OKRs to be aligned with the team that they're part of, and then that team’s OKRs being aligned with the rest of maybe the division and then the company OKRs. The problem is that that takes time, cascading up and down means extra meetings, means extra conversations. And I've not seen that work well, especially in smaller organizations, but even in bigger organizations, when you have all kinds of tools and people to support that process, it just puts extra churn in the model. I love OKRs at the individual level where you, as a leader, as a manager, ask everybody to have an OKR that describes their own role in the company.
The objective is a great tool to describe why a certain role exists, what's the objective of the work that you do in a given quarter, but actually also long term. When you look at OKRs in a marketing team, in customer success, in the sales team, the objectives typically don't change. In marketing, it's something along the lines of driving demand generation at a certain cost. And that's the objective. And of course, every quarter, the focus will be different and that can be expressed in the key results and the activities that support the objective, but the objective itself doesn't really change. The same for customer success, the objective there might be all related to customer retention and churn, and then the key results change. And if you do that at the individual level, why are you here? What are the three or four objectives of your position, of your role? I think it's very powerful to ask individuals to do that.
Then when you have that clarity across your team, where everybody can share those OKRs with each other, of course, it is nice to see, hey, are these aligned with what I want my team to be working on? Why my team is here? Why do we have a marketing organization? And do the OKRs of the individual marketing team members align with what I envision as a marketing leader, our marketing team to do and to contribute to the organization?
But if you then try to match that exactly in a spreadsheet to team OKRs and then try to align that maybe at the board level or at the company leadership team level, it just takes a lot of extra cycles. And what then often happens is that you're one month into the quarter and the OKRs are still not final. And so I'm not a big fan of cascading either up or cascading down. I do like to start with individuals and then they can share them across the team. We love to do it in all hands meeting, but not everybody... Everybody shows up and everybody can be expected to share their OKRs, but we only call on a couple of people and they share them across the team. And you expect people to keep doing that at the team level, to share their OKRs, so that everybody can see what their team members are focused on at a given quarter.
I love that point especially. One of the things that we do that I've really come to like is that our OKRs are public. They're shared, they go into a shared channel and you can click in and see anybody's OKRs. And it's really cool when you're at the beginning of the quarter or at the end of a quarter setting your OKRs for the next one to look in and see who the people that you work closely with, what their key results are. And then you can model some of yours to support some of the same goals. And then suddenly you're both sharing something and working towards the same thing, which is really cool.
And now there's always this question of key results should always be measurable. They should ideally be an absolute number, so that you can measure success against it. And it should not be based on an activity. Certain things are difficult to do that with when you're first getting started. Let's say, if you've just started an initiative or you're starting something from scratch, let's say, a podcast, the key result, in many cases, you feel tempted to say let's launch five episodes. And ideally your key result would not be let's launch five episodes. It would be, let's get a certain number of people to convert through the podcast or let's sell something through the podcast and attribute one person to that channel. How do you balance those two things, which is, there's a sliding spectrum from an activity to an actual key result and leading and lagging indicators?
It's the one thing I think that when teams get started with OKRs, that they struggle the most with because there is no one way to describe a good key result. I think when you are new to OKRs, when you're for the first time measuring what you do, measuring activities is actually a key result. Because if you actually do that and you achieve, for example, in your podcast scenario, the publication of five episodes, that's a key result because you just got started and publishing five podcasts is a fantastic first achievement. Now, of course, for the next quarter, you want to raise the bar and you want to say, "Hey, let's get a certain amount of listeners." And then maybe the quarter after that you say, "Let's get a certain amount of those listeners to convert into paying subscribers."
So I think you want to always ask the question: is the activity... If you're describing an activity as a key result… is the activity worth it? Is it a key result in itself? And if it is done fine. But always ask yourself, is this actually a key result? When you think of living healthy, a key result could be for you to bring your blood pressure down. And even that you could argue is a leading indicator of maybe living longer. But neither of those things are very actionable. So they're not great key results to put in OKRs. A good result, key result, in an OKR would be, how many times do you go to the gym in a given quarter, or how many times do you achieve a certain, maybe, daily goal of your step count? Because that would be something that let's say, you say, "Hey, I want to have in this quarter, I want to have a hundred days where I go over 10,000 steps."
If that actually is a meaningful key result for you, that means things have really changed that you can be really proud of yourself, then that's a fantastic OKR. If you've achieved that, maybe the OKR for the next quarter is to lose a certain amount of weight. So I think that's the tricky thing. When you coach people to do OKRs the first time, you definitely want to challenge your team to do key results and not activities. But if those activities in themselves are really meaningful to get something started or to show real progress, then I think they're okay. But it all is also of course, in this context of a quarter, what is the key results for a full quarter? Sometimes I see key results that are really good, really solid, but only for the next week. The number is not large enough to represent a full quarter.
Writing three blog posts, for someone who's never blogged before, maybe that's a decent key result for a quarter. But honestly for three months you can probably do five or 10. So that's the other part, when is it really key? When is it... Is the number challenging enough? And finally, I don't want to lose something you started with Mike, this notion of using absolute numbers versus for example, percentages or describing an activity or describing an effort. You want these tools like OKRs to be extremely easy to use, easy to understand and to help you. And for that, you want to make the numbers that you use really easy to interpret. And that's the only reason I always ask when someone has a percentage, increase the conversion rate of contact form filled to MQL by a certain percentage. I always ask, how many of those forms need to be filled?
We just need to get the conversion rate up. Well, but you know how many firms were filled this month or this quarter,
You know what the benchmark is, yup.
Then just turn your percentage into an absolute number. It's just a simple calculation. And now it makes it so much easier during a quarter to actually follow whether you're on track or not. And the interesting, also powerful, thing often is Mike when you force yourself to turn the percentage into an absolute number, you actually have to go find the data and make sure the data is accurate because sometimes I see people put percentages in their OKRs and they ask them, "Do you actually know how to measure this? Do you actually have the data?" And they often don't.
And do you have some examples of different key results that you could use for... Because we talk a lot about marketing and performance marketing. It's a little easier because you can talk about, well, not performance marketing, but just the marketing-
Demand generation.
Yeah. Demand gen. You can talk about MQLs at the... Well, starting from the awareness phase, you can talk about things we were mentioning earlier, which is the number of new podcasts you've created at the front end in the beginning of a program, the number of campaigns you've launched, maybe the number of unique sessions you're driving to a certain landing page or a website or to blog content, the number of keywords you have ranking. And then as you move forward and the program matures a little bit more, you move into the consideration phase of things, which is number of SQLs from a certain channel, the number of MQLs, the number of new subscriptions, as you were saying.
And then beyond that, you start to optimize things and you move towards the decision phase of the funnel. And so you're talking about key results that are around dollars worth of pipeline created or a certain amount of closed one revenue or a number of new accounts or number of new users. And so it's relatively easy when we talk about marketing, but do you have any key result examples for things like customer success or sales as an alternative?
Yeah. And we should put a couple of these in a blog article that we refer to. I think every commercial function in a B2B SaaS company, but in most companies, is in the end a funnel. You can argue that even the non-commercial functions have many funnels, but whether it's customer success, the funnel is from how many customer health checks do you do? How many of those convert into maybe an opportunity to help them get more out of your solution and maybe that leads to them paying more overtime or it leads to them not churning. That's a funnel, you have to do probably more health checks. Then the amount of customers who end up buying where there's a funnel. Sales, of course, is a funnel, from how many meetings do you have, to how many of those convert into actually doing a proposal, those proposals, closing, turning into revenue.
And marketing, all the examples you just gave, from visitors on your website to subscribers, to subscribers that become leads, MQLs, SQLs, et cetera. And I think all those are valid key results. And it is really important that the people who are close to the work get measured and use key results that are related to the things they influence. I'm a big fan of people in marketing, for example, thinking about the revenue impact they are making. But honestly, if you're the web manager or you're doing conversion optimization landing pages, it's far more actionable for you to know, my key result is the amount of people who actually fill out the form, than whether those in the end convert to sales opportunities and those sales opportunities convert into revenue. So I think there's sometimes a mistake that people think that metrics that are deeper in the funnel, closer to revenue are always better.
I think it's important for everybody in the company to ask, "Why am I doing this? Why am I driving MQLs for example? Of course, those need to lead to opportunities, and those opportunities need to lead to customers that fit your ideal customer profile. And those are conversations that need to be had. The data needs to flow back to the people who can learn from that. How do I get better fitting people filling out the form, but an OKR needs to be close to what someone actually influences with their day to day work. Otherwise, they just become very abstract and not very... really not that relevant.
That's a great point. And when you're... I guess the genesis of this topic was... is, how do you make sure that you're checking in on OKRs and making sure that you're continuing to monitor your progress against them? How do you do that for your teams and how do you structure that meeting and make sure everybody's on the same page when it comes to that?
This goes back to, you have to inspect what you expect. And as a leader, I've seen people make a lot of noise around building fantastic OKRs, and then they forget to ask about them for the rest of the quarter. So I think it's good to have time set aside every week for your team to look at their own OKRs. I think making sure they can, and maybe reminding team members to do so is really helpful to keep everybody's focus clear. Then I like to do one month into the quarter, the quick check with everybody on the team, like, "Hey, how do you feel about your OKRs? Were they the right ones? How do you feel about the targets you set for yourself? Are you on track?"
And there's no need for a lot of big meetings around that, but I think it's good to just do a quick... Ask hey how is it going? But then two months into the quarter, I think when you're at the two third mark, I do believe you need to do a deep dive in the OKRs that are not in great shape. If anything is at 50% or on track to get to 50% or lower, you need to do some assessment of, was the goal the wrong goal, or do we actually have something that needs to be addressed? Are we now in problem solving mode?
And there's a... It's a really cool tool from... I think it's from lean manufacturing called an A3 problem solving sheet. If you Google that a three problem solving, you get a nice template. And it helps you when something is not in great shape, let's say you have an OKR that's turning red or yellow, as in it's underperforming, you need to do a little bit of, hey, were my assumptions correct? How did I set this target? Have those assumptions changed? Did my plan not work? The plan that I had to go execute, and why? And am I... I'd like you Mike to share the leaking pipe example because you need to do some root cause analysis, what is really causing my metric or my key results to be behind? Maybe you can share that. I think that's a great way to do a check in on OKRs.
I think I've talked about it in a previous podcast, but it's essentially this idea that if you ask people, you see a puddle on the floor and you ask people what they would do, it tends to get split. Some people would say, "Well, I'd clean up the puddle." And some people would say, "Well, I'd ask why is there a puddle on the floor?" And that's where you want to move people towards, is that line of thinking, because there's so many reasons that there could be a puddle on the floor. The specific example that I've heard and that I use now, it's this idea that, well, the puddle is coming from a leak in the pipe from above. And if you're the person that ask why, you'd maybe see that and maybe you'd go fix the pipe.
But if there's an issue that's further down the line, you want to be able to ask why again and say, why is the pipe leaking? Maybe the water pressure is too high. So let's go to the boiler room and make sure that the valves are all set at the right place and we're all good there. But maybe there's another underlying issue for why the water pressure is too high, maybe the regulator's broken. So there's all these things that you... that can be causing issues and you really have to be able to ask why each time to get to the true root cause, which is what I think the A3 template, that you're talking about, does a very similar thing. And it's really like a mindset that you have to get into of not just fixing the problem that's right in front of your face, but understanding what could be causing it. And also understanding, I guess, too, when to call it quits on asking why, because there's also the... It goes both ways, right?
You got to go do something at some point.
Yeah. Because sometimes there's just variability. Sometimes in marketing, we look at a chart and it dips one week and you want to say like, why did that happen? What led to this large change in the pattern. And sometimes it's just variability, but you have to be able to ask, run through your checklist and make sure that you've looked at all the things that could have caused it. And if at the end of the day, you're like, well, there's nothing that's really standing out. Let's just let this run for a little bit longer and see if this is an anomaly, or if this is something that we really do need to overhaul or look into the boiler room.
Yeah. And this question, why is this happening? Is the first step in problem solving. And by the way you do this, I think when an OKR is falling behind, below your expect... The OKR... You should achieve OKR results between 70 and 80% of your set goal. And that's a whole different topic, that OKRs are meant to be challenging, because you will not be able to hit maybe all of them. And just like in school, you want to score As and just doing a good job, it might be a C or B minus. And so if you're not on track for a B minus, that's a 70, 80% of the achievement, then you need to start thinking about, what do I do about this? And you talked about the why. So first you want to know why is this happening? And once you found out why, let's say the pipe is leaking, now you got to go back to how do I address this and make it super actionable? How do I call a plumber and actually go call the plumber?
Or do we need a plumber and do we have the tools to do it ourselves?
Can we do it ourselves? Whatever those actions are. But I think... I call this the why and the how ladder. The why is you step up the ladder to go to the root cause. And then with how you step down the ladder, again, how do I address this? Hey, I need a plumber. How do I find a plumber? I go do an online search. How do I now make sure that this is the right person? Is this a plumber who can actually address the challenge we have? How do I make sure they show up on time? There's this, how, how, how, how that goes to very specific actions that you can then take to address the challenges with the specific OKR. OKRs ring Q4 of the year.
If you've not used them before, this might be a great way it to pilot them in Q4. So you're going to have a strong 2022 start with OKR that your team maybe has learned to use. I don't believe there's any other system that is more suitable for smaller technology companies, because OKRs are relatively simple to understand. I also believe the quarterly timeframe is perfect. I think when you set objectives and key results or something similar, or goals, for a year period, for example, it's just too far away for people to really care and it's... for it to become very concrete. And if it's weekly or monthly, it just changes too fast. People are not able to really focus on something and do a great job.